Question 3

Straight and Flat Company manufactures steam irons which is to be sold in Asia for RM75.00 per iron. The following information is in related to the budgeted production and sales of steam irons for the last quarter of 2014. 1. Budgeted sales in unit: July 10,000 August 12,000 September 14,000 October 13,200 November 13,800 December 14,500 2. 60% of the sales will be collected one month after sales. 30% of the sales will be collected two months after sales. 10% of the sales will be collected three months after sales. Variable production cost per iron: Direct materials 25.00 Direct labour 16.00 Overhead 11.00 RM 3. Budgeted production in units: August 13,500 September 13,700 October 14,000 November 14,200 December 15,000 - 4. It is the company policy to pay creditors for material two months after purchases are made 5. Wages and Variable overhead are paid within the month they are incurred. 6. Fixed overhead is RM190,000 per month, which includes depreciation of RM60,000. 7. Sales commissions are 5% on sales and are to be paid one month after sales are made. 8. Fixed selling and administration is RM65,000 per month which is payable in the month it is incurred. 9. One of the old machines will be sold for RM10,000 in the month of November and a new machine will replace it in the same month at a cost of RM75,000.: 10. The company will pay dividends which was declared at RM100,000 at the end of December. 11. It is expected that the cash balance on September 30th will be RM75,000. Required: As the management accountant of Straight and Flat, you are required to prepare the cash budget for the last quarter of 2014